The Chhattisgarh Authority for Advance Ruling (AAR) ruled that no GST can be levied on washed/rejected Coal from washery on which Compensation Cess is paid and Input Tax Credit (ITC) not availed.
The applicant, Parsa Kente Colleries sought advance ruling under Section 98 of the Chhattisgarh GST Act, 2017 on whether the benefit of Nil compensation cess would be available if the supplier has discharged compensation cess on the entire quantity of raw coal albeit at the stage of supply of washed coal and coal rejects respectively as stipulated under Sr No 41 A of Notification No 1/2017 CC(Rate) as amended.
The applicant is a mine development operator engaged in rendering Mining Services under a Coal Mining and Development executed with Rajasthan Rajya Vidyut Utpadan Nigam Limited which has been allotted a coal block by the Central Government. The Central Government allotted coal blocks (parsa kente) in the State of Chhattisgarh to the Rajasthan Rajya Vidyut Utpadan Nigam Limited.
The applicant as a part of the contractual obligation deposits in the Electronic Cash Ledger of the Rajasthan Rajya Vidyut Utpadan Nigam Limited, the compensation cess attributable to the entire quantity of raw coal.
The Rajasthan Rajya Vidyut Utpadan Nigam Limited debits the applicable cess at the time of supply of washed coal from the Rajasthan Rajya Vidyut Utpadan Nigam Limited, Chhattisgarh to the Rajasthan Rajya Vidyut Utpadan Nigam Limited, Rajasthan and it aso debits the cess at the time of supplying coal rejects to the applicant.
The applicant submitted that since it is a coal washery the coal rejects supplied by it attracts nil compensation cess when the due compensation cess on the total quantity of the raw coal raised stands discharged as also when no ITC of the compensation Cess is availed by any person.
A Two Member Bench of the Authority comprising Sonal K Mishra, Joint Commissioner and Rajesh Kumar Singh, Additional Commisioner held that “No GST can be availed on washed/rejected Coal from washery on which Compensation Cess paid, when no ITC is availed”
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